Achieving World Class Sourcing Team Effort
Robert J. Trent, Ph.D.
Robert J. Trent, Ph.D., Lehigh University, 621 Taylor Street, Bethlehem, Pennsylvania 18015, (610)758-4952.
82nd Annual International Conference Proceedings - 1997
Abstract. While many variables can affect team performance, success requires the individual and collective effort of team members. Given that over 80 percent of firms surveyed use or plan to use cross-functional sourcing teams, understanding how to promote effort becomes critical. This session describes, step-by-step, what organizations must do to create and environment that recognizes and promotes sourcing team effort. The ideas presented are based on field research and experience with over 100 cross-functional sourcing teams, continuing research involving organizational work teams, and an integration of related work by leading group researchers.
Introduction. Imagine it is the year 2000 and the Summer Olympics are fast approaching. Again, the U.S. plans to put together a "Dream Team" consisting of the NBA's best basketball players. This team will feature great shooting, speed, rebounding, and defense. The media state that this year's team will be even better than the team that won the gold medal in Atlanta. The pre-Olympic hype makes this team sound almost too good to be true.
Looking ahead, the dream team never really came together that year. Three of the team's best players decided to pursue lucrative offers that prevented Olympic competition. Two others decided that the risk of career ending injury was too great and decided not to play. Still, three others belonged to professional teams that enforced contract clauses prohibiting Olympic competition. The team that represented the U.S. was slightly better than a good college team. As a result, the U.S. had to settle for a hard fought Bronze metal, something that was unthinkable just a few months earlier.
Is this example realistic? Perhaps not. Yet, if we analyze the success of cross-functional sourcing teams at firms across the U.S., we would find many examples of teams failing to fulfill their "pre-game hype." Across most industries, firms are relying on teams to deliver breakthrough performance gains. If a team does not achieve these gains, members and management wonder what is wrong with the organization or the team.
While many variables can affect how teams perform, team-based management requires the individual and collective effort of team members to be successful. Member effort is a necessary but not sufficient condition for team success. Although effort does not guarantee success, without it the team has little chance of becoming a high performing work unit. A cross-functional sourcing team, no matter how qualified its members, achieves little if members fail to put forth the required effort on its task.
This article details the actions organizations should take to promote higher levels of team and member effort. Proactively addressing the issues related to team effort increases the probability that a team will be successful. The ideas presented are based on field research and experience with more than 100 cross-functional sourcing teams, continuing research and experience with organizational teams, and an integration of related work by leading group researchers.
PROACTIVELY PROMOTING SOURCING TEAM MEMBER EFFORT. The act of creating a cross-functional sourcing teams does not guarantee these teams will be committed to their task. Since most firms plan to use teams to develop and execute procurement and sourcing strategy, creating an environment that promotes member effort becomes critical. Realizing consistently high effort and commitment from sourcing teams is never an accident. It is the result of carefully executed plans designed to promote the individual and collective effort of team members. Consequently, how can firms ensure their sourcing teams put forth the effort and commitment required to make team-based management successful?
Figure 1 presents an explanatory model of individual and collective team effort where effort is a necessary but not sufficient condition for team success. The following sections address the primary drivers of individual and collective team effort as presented in Figure 1. Combined, these six areas create a blueprint to help make the reality from using teams match the hype surrounding their use.
Figure 1 is not available in this text-only version.
Step One: Select Proper Team Assignments. As firms move toward team-based management, a key planning activity involves selecting assignments suitable for sourcing teams. When doing this, firms must avoid several actions that can adversely affect team effort. These include (1) forming too many teams at once, (2) using teams for routine task assignments, and (3) limiting the ability of members to support a specific team by assigning them to multiple teams.
Forming too many teams can overwhelm an organization's ability to absorb such large-scale change. A second risk involves using teams for minor or routine task assignments. When confronted with minor or trivial tasks, members often perceive team work as inconsequential. Finally, assigning members to multiple team assignments can reduce an individual's ability to support and commit to a specific team. Management must consider carefully the performance risks associated with a team member reporting to or supporting "too many masters."
Selecting proper assignments can significantly affect the effort a team and its members put forth. A leading group researcher, J. Richard Hackman, has concluded that team or group members are most likely to work hard on a task when the task is motivationally engaging. This means the task satisfies certain conditions: team members must use a variety of higher-level skills; the task is a whole and meaningful piece of work; the outcomes of the team's work have significant consequences on others outside the team; the task gives groups members substantial autonomy for deciding how they do the work; and work on the task generates regular and accurate feedback about group performance. Meeting these criteria should result in members perceiving their work as meaningful, which should lead to a collective responsibility for the team's output.
Step Two: Create the Right Team. Selecting team tasks should naturally precede creating teams. It makes little sense to create a team and then decide its task. After identifying critical tasks, it becomes clearer what knowledge, skills, and abilities a team requires. Important considerations when creating teams include functional representation, team size, member and leader selection, and training requirements. Of all the issues relating to member effort and commitment, putting together the right team may be the most important.
Functional Representation. Sourcing tasks usually benefit from multi-disciplinary knowledge and expertise. In fact, bringing different functional perspectives together is part of what makes team-based management a powerful approach to sourcing. Teams should include only those functions critical to the continuous support of a team's assignment. For example, sourcing teams often do not require a full time finance representative. Involving this individual full time would be a waste of valuable resources. If a team requires occasional support, then the team should rely on that member as-needed.
Team Size. A consensus among leading researchers is that no ideal size exists for work teams. Team size is a function of the task and the knowledge, skills and abilities required to support that task. Hackman argues that a group or team should be large enough to do the work - but not much larger. As team size increases, difficulty in coordinating team and member activities also increases while the likelihood that the average contribution of individual members decreases. This is due to some members perceiving that, given the team's larger size, other members will be available to perform the work.
Under staffing a team also has risk. The team may lack the expertise or resources required to address a task properly. This can lead to the team reaching poor, partially complete, or rushed decisions. The team may also become frustrated due to the overwhelming task it faces and conclude that it is not worth the effort to pursue an unrealistic task.
Organizations must consider team size requirements carefully. If a task decision requires "buy-in" from a larger group, then perhaps a smaller core team should execute consensus decisions reached by the larger group. A team should include only those members and functions required to support the task assignment. A team of three members may be exactly what a task requires while another team requires 12 or 15 members.
Member Selection. After identifying the knowledge and skills required to support a team's task, selecting the right members and leader becomes critical. Several principles should guide team member selection: (1) a member should have experience and knowledge related to the task, (2) a member can work well with others, and (3) a member has the time to work on the team.
Task-relevant experience is a critical consideration during team formation. Members should have knowledge and experience related to their expected role on the sourcing team. For example, a quality engineer must understand supplier quality systems. Ill-prepared or unqualified members can waste team effort as other members try to bring those members up to the required level.
A second consideration concerns interpersonal relationships. Selected members should have a personal chemistry that supports collaboration. This is not an easy issue to address when a team has members who have never met. When this occurs, executive management may have to rely on an individual's previous willingness to work in a team setting.
Executive management should not underestimate the importance of time availability when selecting team members. Balancing regular duties with the requirements of supporting the team is perhaps the greatest hurdle faced by part-time members. This hurdle is compounded when members must support more than one team. While some team assignments are a member's primary job focus, many are still part-time. These assignments require members who can commit the necessary time with managers who are willing to release the member to support the team. This is especially critical when forming part-time sourcing teams since most members will be from functional groups where "purchasing is not really our responsibility."
Leader Selection. The influence that a team leader has on team performance is particularly important. Previous research linking leader effectiveness and team member effort makes it vital that organizations understand the important relationship between leadership, effort, and performance.
Team leaders must satisfy many different requirements that, when taken together, promote member effort. For example, team leaders must work with the team early to establish specific team performance targets. Goal setting is an ideal way of gaining individual commitment because members will likely commit to goals they help establish.
Leaders must also work actively with members who find themselves "selected," sometimes reluctantly, to be members of sourcing teams. When part-time members face time constraints, the leader may have to work with functional or executive management to agree about how much time a member can commit to team activities.
A skillful leader makes sure that each member remains committed and involved with the team. To secure individual involvement, leaders must work with the team to delegate tasks while holding members accountable. A leader may also share or rotate leadership responsibilities to help develop the leadership abilities of members while securing buy-in to the team process. Finally, a skilled leader knows how to use the performance evaluation and reward system to motivate members.
Supplier Involvement. Several years ago, a study of cross-functional sourcing teams revealed that teams with suppliers as either formal members or informal participants received higher team effort ratings, on average, compared with teams that did not have supplier involvement. Furthermore, teams involving suppliers reported greater satisfaction with the quality of information exchange between the team and its key suppliers, experienced fewer problems coordinating work activity with suppliers, and received greater performance improvement support from suppliers compared with teams not pursuing external involvement. Given these findings, executive management should consider carefully if supplier participation on a sourcing team is viable.
Training Requirements. Many executives have the mistaken notion that people should naturally know how to work in a group or team setting. The truth is that team-based management requires members and leaders to use a new set of skills. Without the necessary skill set, team members and leaders place the success of this approach at risk. An organization should identify individual and team training requirements early during the planning phase of team-based management.
Step Three: Develop Team-Established Performance Targets. Executive management often establishes broad performance targets when forming sourcing teams. For example, it may charge cross-functional commodity teams with the task of reducing purchase costs by 6 percent over a certain period. At no point, however, should executive management tell the team how to achieve the target. Developing specific plans, timing, methods, and accountabilities remains the team's responsibility. Management should expect motivated members to put forth the effort required to achieve the team's task because the team owns the task.
Developing quantified goals and objectives provides performance targets against which to evaluate progress. This helps when developing team strategies and action plans, reporting progress to an executive steering committee or manager, or providing feedback to team members. Furthermore, teams that establish performance targets have a greater probability of success compared with teams that do not establish targets. A study of cross-functional U.S. Air Force work teams revealed that teams engaging in formal goal setting achieved 75 percent greater group productivity compared with non goal setting groups.
Goal setting is an ideal way to gain individual commitment because members will likely commit to goals they help establish. If a team sets its goals properly, a clear understanding should exist among team members concerning individual accountability. Clearly stated goals and objectives reduce the likelihood that members will misunderstand what the team is trying to accomplish. Furthermore, the goal setting process helps establish and clarify individual member roles.
Teams often develop more aggressive goals compared with an external manager or leader who establishes specific targets singularly for the team. Aggressive goals established by the team can further motivate and stimulate members. The link between goal setting and effort is such that organizations and teams cannot ignore this activity and still hope to satisfy performance expectations.
Step Four: Provide the Required Organizational Resource Support. A set of important but frequently overlooked variables includes the resources that promote or interfere with team effort and performance. Resources that promote team effort (or interfere with team effort when they are not available) include (1) adequate time to pursue team assignments, (2) team members who possess the skills and abilities related to the team's task, (3) overall executive management commitment to the cross-functional team process, (4) adequate budgetary support, and (5) support from others external to the team, including supplier support. Teams displaying higher team effort indicate they have access to the necessary resources at higher levels. A lack of resource support sends a negative message about team-based management. Members begin to question that if teams are so important, why are the resources required to operate effectively not available?
Step Five: Promote Internal Decision-Making Authority. Managers hear so much about empowerment that it becomes difficult to evaluate this topic rationally. In reality, empowerment can be a dangerous part of team-based management. If a team has unqualified members or members are mismatched given the assignment, then empowerment can be risky within an organization.
Teams with higher levels of internal decision-making authority usually put forth greater team effort. Internal authority refers to a team's ability control internal team processes and activities. Furthermore, internal authority correlates directly with several important dimensions of team interaction. Teams with higher levels of internal authority indicate greater satisfaction with team meetings, receive higher external ratings of team effort and performance, and express greater satisfaction with the methods and accuracy of information exchange between members. If the reason to use sourcing teams is to improve decision-making quality, then a competent team should have decision making authority.
Step Six: Use the Performance Measurement and Reward System. A critical issue facing firms concerns how to measure and reward team performance. A strong relationship exists between how much time a member commits to team activities and the proportion of that member's performance evaluation related to team activities. Put simply, what gets rewarded gets done. However, a recent industry survey revealed that only a third of the respondents reported their companies have revamped compensation programs to increase the emphasis given to team participation and performance. An absence of a team-based evaluation system can affect a member's willingness to support a team, particularly if the team assignment is beyond regular responsibilities.
A well-designed measurement and reward system should lead to desirable results. The system can motivate members to participate on team activities by recognizing and rewarding superior effort and performance. An effective system can also provide performance feedback to the team and executive management. This helps a team to measure its progress toward its stated goals and objectives. The system can also help team decision making, since measurement and reward systems usually require the up-front establishment of performance targets with accountabilities. The performance measurement and reward system can serve as a powerful tool for forwarding executive management's objectives concerning team-based management.
At a minimum, firms should evaluate team performance as a collective unit. This encourages members to work together as a team rather than as individuals assembled into a group. Evaluating individual member contribution can also send notice to each member that the team expects the active participation of all members. Individual evaluation helps deter "free riders."
CONCLUSION. Architects of team-based management never intended this process to deliver average or marginally better performance results. This approach is about delivering results that create competitive advantages--advantages that are difficult to duplicate. Realizing the necessary effort from team members requires proactively addressing the key issues and decisions surrounding the use of cross-functional sourcing teams. A failure to do so enhances the likelihood that actual team performance will fail to match the "pre-game hype."